Altisource Announces Strong Fourth Quarter and Full Year Results

Altisource Announces Strong Fourth Quarter and Full Year Results

LUXEMBOURG, February 13, 2014 (GLOBE NEWSWIRE) -- Altisource Portfolio
Solutions S.A. ("Altisource") (Nasdaq:ASPS) today reported record fourth
quarter and full year service revenue and record full year net income
attributable to shareholders. The growth in service revenue and net income was
primarily driven by the continued growth of our largest customer, Ocwen
Financial Corporation ("Ocwen"), and growth of the Financial Services'
mortgage charge-off and customer relationship management businesses.

Full Year 2013 Results Compared to 2012:

  *Service revenue of $662.1 million, a 42% increase
  *Net income attributable to Altisource of $130.0 million, a 17% increase
  *Diluted earnings per share of $5.19, a 17% increase
  *Cash from operations of $185.5 million, a 59% increase
  *Return on equity of 78%, compared to 58% in 2012

Fourth Quarter 2013 Results Compared to Fourth Quarter 2012:

  *Service revenue of $192.4 million, a 58% increase
  *Net income attributable to Altisource of $35.5 million, a 17% increase
  *Diluted earnings per share of $1.42, an 18% increase
  *Cash from operations of $50.8 million, a 162% increase

"2013 was a very strong year for Altisource, growing both organically as well
as through strategic acquisitions. Earnings growth was slower than revenue as
we continued to invest in the business to support our future growth. We are
well positioned with our core business and our growth initiatives for an even
better 2014. Further, we intend to continue our aggressive share repurchase
program^1," said Chairman William Erbey.

Full year and fourth quarter 2013 highlights include:

  *The average number of loans serviced by Ocwen on REALServicing^® totaled
    1.2 million in 2013 and 1.5 million in the fourth quarter of 2013
  *On November 15, 2013, we acquired Equator, LLC ("Equator"), a national
    leader in mortgage and real estate related business process management
    solutions, for an initial purchase price of $63.4 million plus contingent
    earn-out consideration of up to an additional $80 million over three
    years, subject to Equator achieving annual performance targets
  *On March 29, 2013, we completed the acquisition of the Homeward
    Residential, Inc. fee-based businesses from Ocwen for an aggregate
    purchase price of $75.8 million
  *On April 12, 2013, we completed the Residential Capital, LLC fee-based
    business transaction with Ocwen for an aggregate purchase price of $128.8
    million
  *On May 7, 2013, we increased borrowings under our senior secured term loan
    agreement to $400 million. Furthermore, on December 9, 2013, we refinanced
    the senior secured term loan which, among other changes, lowered the
    interest rate of the term loan
  *We repurchased 1.2 million shares of our common stock under our stock
    repurchase program during 2013 at an average price of $116.99 per share

William Shepro, Chief Executive Officer, further commented, "During 2013, we
focused on providing high quality services to our largest customer, Ocwen,
improving our margins in our default related services businesses and
developing our growth engines. With the progress made in 2013, we believe we
are on track to achieve pre-tax income as a percentage of service revenue of
47% in our default related services businesses by the end of the first quarter
of 2014. Further, we continue to make good progress on our growth initiatives
and are optimistic that they will serve as an important longer term component
of our revenue and customer diversification strategy."

Forward-Looking Statements

This press release contains forward-looking statements that involve a number
of risks and uncertainties. Those forward-looking statements include all
statements that are not historical fact, including statements about
management's beliefs and expectations. Forward-looking statements are based on
management's beliefs as well as assumptions made by and information currently
available to management. Because such statements are based on expectations as
to future economic performance and are not statements of historical fact,
actual results may differ materially from those projected. The Company
undertakes no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise. The risks and
uncertainties to which forward-looking statements are subject include, but are
not limited to: Altisource's ability to retain existing customers and attract
new customers; general economic and market conditions; governmental
regulations, taxes and policies; availability of adequate and timely sources
of liquidity; and other risks and uncertainties detailed in the
"Forward-Looking Statements," "Risk Factors" and other sections of the
Company's Form 10-K and other filings with the Securities and Exchange
Commission.

Webcast

Altisource will host a webcast at 11:00 a.m. EST today to discuss our fourth
quarter and full year results. A link to the live audio webcast will be
available on the Company's website through the Investor Relations home page.
Those who want to listen to the call should go to the website fifteen minutes
prior to the call to register, download and install any necessary audio
software. A replay of the conference call will be available via the website
approximately two hours after the conclusion of the call and will remain
available for approximately 30 days.

About Altisource

Altisource is a premier marketplace and transaction solutions provider for the
real estate, mortgage and consumer debt industries offering both distribution
and content. We leverage proprietary business process, vendor and electronic
payment management software and behavioral science based analytics to improve
outcomes for marketplace participants. Additional information is available at
www.altisource.com.

^1 February 2014, Altisource filed a preliminary proxy with the Securities and
Exchange Commission (the "SEC"). We intend to file a definitive proxy followed
by a shareholder meeting to present a proposal for shareholder approval to
repurchase up to 15% of our common stock. Any solicitation of approval of this
proposal will be made only pursuant to such definitive proxy, which you should
review for more information.You will be able to obtain a free copy of the
definitive proxy when it becomes available at the website maintained by the
SEC at www.sec.gov.


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                
                                   Three months ended   Years ended
                                   December 31,         December 31,
                                   2013       2012      2013       2012
                                                                
Service revenue                                                  
Mortgage Services                   $139,752 $91,982 $490,333 $351,908
Financial Services                  26,220     14,879    92,479     63,979
Technology Services                 33,702     20,205    103,891    74,189
Eliminations                        (7,233)    (5,327)   (24,644)   (23,147)
                                   192,441    121,739   662,059    466,929
Reimbursable expenses               29,417     18,301    102,478    96,147
Non-controlling interests           727        1,061     3,820      5,284
Total revenue                       222,585    141,101   768,357    568,360
Cost of revenue                     114,868    69,115    390,002    270,054
Reimbursable expenses               29,417     18,301    102,478    96,147
Gross profit                        78,300     53,685    275,877    202,159
Selling, general and administrative 33,783     20,227    113,810    74,712
expenses
Income from operations              44,517     33,458    162,067    127,447
Other income (expense), net:                                     
Interest expense                    (5,989)    (1,171)   (20,291)   (1,210)
Other income (expense), net         28         (688)     557        (1,588)
Total other income (expense), net   (5,961)    (1,859)   (19,734)   (2,798)
Income before income taxes and      38,556     31,599    142,333    124,649
non-controlling interests
Income tax provision                (2,313)    (245)     (8,540)    (8,738)
Net income                          36,243     31,354    133,793    115,911
Net income attributable to          (727)      (1,061)   (3,820)    (5,284)
non-controlling interests
Net income attributable to          $35,516  $30,293 $129,973 $110,627
Altisource
                                                                
Earnings per share:                                              
Basic                               $1.56    $1.30   $5.63    $4.74
Diluted                             $1.42    $1.20   $5.19    $4.43
                                                                
Weighted average shares                                          
outstanding:
Basic                               22,734     23,389    23,072     23,358
Diluted                             25,005     25,162    25,053     24,962
                                                                
Transactions with related parties:                               
Revenue                             $147,198 $80,736 $502,087 $338,227
Selling, general and administrative 788        629       2,921      2,430
expenses
Other income                        --         86        773        86


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
                                                                  
                                                        December 31,
                                                        2013       2012
ASSETS                                                             
                                                                  
Current assets:                                                    
Cash and cash equivalents                                $130,324 $105,502
Accounts receivable, net                                 101,297    88,955
Prepaid expenses and other current assets                11,389     7,618
Deferred tax assets, net                                 2,837      1,775
Total current assets                                     245,847    203,850
Premises and equipment, net                              87,252     50,399
Deferred tax assets, net                                 622        4,073
Intangible assets, net                                   276,162    56,586
Goodwill                                                 97,375     14,915
Investment in Correspondent One                          --         12,729
Loan to Ocwen                                            --         75,000
Other assets                                             17,580     11,674
Total assets                                             $724,838 $429,226
                                                                  
LIABILITIES AND EQUITY                                             
                                                                  
Current liabilities:                                               
Accounts payable and accrued expenses                    $79,492  $58,976
Current portion of long-term debt                        3,975      2,000
Current portion of capital lease obligations             --         233
Deferred revenue                                         36,742     2,482
Other current liabilities                                10,131     7,941
Total current liabilities                                130,340    71,632
                                                                  
Long-term debt, less current portion                     391,281    196,027
Other non-current liabilities                            45,476     1,738
                                                                  
Equity:                                                            
Common stock ($1.00 par value; 100,000 shares
authorized; 25,413 issued and 22,629 outstanding as of   25,413     25,413
December 31, 2013; 25,413 issued and 23,427 outstanding
as of December 31, 2012)
Additional paid-in-capital                               89,273     86,873
Retained earnings                                        239,561    124,127
Treasury stock, at cost (2,784 shares as of December 31, (197,548)  (77,954)
2013 and 1,986 shares as of December 31, 2012)
Altisource equity                                        156,699    158,459
                                                                  
Non-controlling interests                                1,042      1,370
Total equity                                             157,741    159,829
                                                                  
Total liabilities and equity                             $724,838 $429,226


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                 
                                                     Years ended December 31,
                                                     2013         2012
                                                                 
Cash flows from operating activities:                             
Net income                                            $133,793   $115,911
Adjustments to reconcile net income to net cash                   
provided by operating activities:
Depreciation and amortization                         19,056       12,776
Amortization of intangible assets                     28,176       5,030
Share-based compensation expense                      2,400        3,644
Equity in losses of and impairment loss on investment 176          1,741
in affiliate
Bad debt expense                                      2,549        3,049
Amortization of debt discount                         223          27
Amortization of debt issuance costs                   958          57
Deferred income taxes                                 2,015        2,992
Loss on sale or disposal of fixed assets              1,309        445
Changes in operating assets and liabilities, net of               
acquisitions:
Accounts receivable                                   (5,602)      (39,999)
Prepaid expenses and other current assets             (2,817)      (2,616)
Other assets                                          (1,586)      2,172
Accounts payable and accrued expenses                 7,381        11,652
Other current and non-current liabilities             (2,557)      (352)
Net cash flows provided by operating activities       185,474      116,529
                                                                 
Cash flows from investing activities:                             
Additions to premises and equipment                   (34,134)     (35,563)
Acquisition of businesses, net of cash acquired       (267,946)    --
Investment in equity affiliate                        (50)         --
Proceeds from sale of equity affiliate                12,648       --
Proceeds from loan to Ocwen                           75,000       --
Loan to Ocwen                                         --           (75,000)
Change in restricted cash                             (1,462)      --
Net cash flows used in investing activities           (215,944)    (110,563)
                                                                 
Cash flows from financing activities:                             
Proceeds from issuance of long-term debt              200,502      198,000
Repayment of long-term debt                           (3,496)      --
Distribution of cash in connection with the           --           (105,000)
Separation of the Residential Asset Businesses
Debt issuance costs                                   (3,200)      (4,317)
Principal payments on capital lease obligations       (233)        (603)
Proceeds from stock option exercises                  6,885        3,214
Purchases of treasury stock                           (141,018)    (16,781)
Contributions from non-controlling interests          28           43
Distributions to non-controlling interests            (4,176)      (7,145)
Net cash flows provided by financing activities       55,292       67,411
                                                                 
                                                                 
Net increase in cash and cash equivalents             24,822       73,377
Cash and cash equivalents at the beginning of the     105,502      32,125
period
                                                                 
Cash and cash equivalents at the end of the period    $130,324   $105,502
                                                                 
Supplemental cash flow information:                               
Interest paid                                         $19,325    $1,134
Income taxes paid, net                                3,671        4,912
                                                                 
Non-cash investing and financing activities:                      
Amortization of tax-deductible goodwill               --          3,334
Premises and equipment purchased on account           4,552        2,457

CONTACT: Michelle D. Esterman
         Chief Financial Officer
         T: +352 2469 7950
         E: Michelle.Esterman@altisource.lu
 
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